By Nicole Friedman
NEW YORK--Oil futures slipped Wednesday after government data
showed U.S. oil stocks were at their highest level in 83 years.
Light, sweet crude for June delivery settled down 31 cents, or
0.3%, at $101.44 a barrel on the New York Mercantile Exchange, the
lowest settlement since April 7. Brent crude on the ICE Futures
Exchange fell 16 cents, or 0.2%, to $109.11 a barrel.
Crude-oil stockpiles rose by 3.5 million barrels to 397.7
million barrels in the week ended April 18, the U.S. Energy
Information Administration said Wednesday. Analysts surveyed by The
Wall Street Journal expected a 2.4 million-barrel increase.
Supplies stand at an all-time high in weekly EIA data going back
to August 1982.
In monthly data going back to 1920, last week's supplies are the
highest since May 1931.
"The market is holding firm in the face of a pretty significant
surplus" in supply, said Tim Evans, analyst at Citi Futures
Perspective. "We clearly are not making an 83-year low in
price."
Prices have climbed above $100 a barrel in recent weeks despite
rising stockpiles because storage supplies in Cushing, Okla., the
delivery point for the Nymex contract, have been shrinking.
A new pipeline opened on Jan. 22 to move supplies out of Cushing
to refineries on the Gulf Coast. Cushing supplies now stand at
their lowest level since 2009, and futures prices have risen as
traders have focused on the large drops in Cushing inventories, Mr.
Evans said.
But with some refineries shutting units for seasonal
maintenance, not all the crude being shipped to the Gulf Coast has
been processed into gasoline and other fuels. Gulf Coast supplies
rose last week to 209.6 million barrels, a new high for the region
according to data going back to 1990.
"People who are focused exclusively on Cushing are focused on an
island that's surrounded by a lake of crude," said Richard
Soultanian, co-president of NUS Consulting Group in Park Ridge,
N.J. "The Gulf is now drowning in crude."
U.S. oil production is booming, due to hydraulic fracturing and
horizontal drilling techniques that have enabled energy producers
to access supplies trapped in shale-oil fields. But some refineries
prefer to process heavy grades of crude, while much of the oil
produced in the U.S. is light crude oil. So rising U.S. production
is not completely replacing imports of oil from overseas.
"With parts of the refinery system continuing to require heavy
and sour foreign crudes, insufficient volumes of crude imports are
being displaced...to prevent stocks building," said analysts at BNP
Paribas SA in a note.
Mr. Evans said he expects U.S. oil prices to fall $10 a barrel
in the next few weeks as traders shift their focus away from
Cushing toward the overall supply level.
Gasoline stockpiles fell less than expected, down 274,000
barrels to 210 million barrels, the EIA said. Analysts surveyed by
The Wall Street Journal expected a 1.4 million-barrel decrease.
Front-month May reformulated gasoline blendstock, or RBOB,
settled down 0.17 cent, or 0.1%, at $3.0935 a gallon.
Distillate stocks, which include heating oil and diesel fuel,
grew by 597,000 barrels to 112.5 million barrels, compared with
analysts' forecast of a drop of 300,000 barrels.
May diesel fell 2.17 cents, or 0.7%, to $2.9809 a gallon.
Refining capacity utilization rose 2.2 percentage points to 91%
of capacity. Analysts had expected the operating rate to rise by
0.3 percentage point in the week.
More information on settlements and highs and lows for futures
on Nymex and ICE platforms can be found by searching for the
following headlines:
Nymex Light Crude Oil Close
Nymex Harbor RBOB Gasoline Close
Nymex Heating Oil Close
ICE Brent Crude Oil Close
ICE Gas Oil Close
Write to Nicole Friedman at nicole.friedman@wsj.com